Online display adspend rises in UK

02 April 2010

LONDON: Online display adspend increased in the UK last year, at a time when many brands were reducing their marketing expenditure in other areas.

Nielsen, the research firm, reported that display advertising revenues in the country reached £506.3 million ($771m; €572m) in 2009, an uptick of 9.7% on an annual basis.

O2, the mobile phone specialist, headed the rankings, with an outlay of £15.2m, equating to a 26.8% share of its media budget.

Neill Garfield, the company's senior marketing manager, argued that it is taking a nuanced approach to cutting through the clutter.

"Online channels are now at relative saturation, so we are investing in offline channels that stimulate online demand," he said.

The COI, the government's communications arm, was in second place, and registered a figure of £10.4m, although this only amounted to 4.8% of its spending over the course of last year.

BT, the telecoms giant, was in third on £9.2m, with BSkyB on £8.1m, and Microsoft on £6.9m, making up the top five, according to Nielsen's estimates.

More broadly, around half of the 100 biggest advertisers trimmed their expenditure across all forms of media in 2009.

However, 80% directed more resources to the web, a move attributed to a heightened desire among brand owners to prove the return on their investment.

"Advertising budgets overall have been slashed, but nonetheless advertisers want measurable returns," Guy Phillipson, ceo of the IAB, the industry body, said.

"They have had to use the budgets they do have really wisely and have learned more in the process."

By category, the financial services sector contributed the largest share of display revenues last year, despite the challenges of the recession.

Within this, Capital One, the credit card provider, recorded a 53.6% increase in its activity in this area, with this medium receiving 99.9% of its overall outlay, which declined by almost two-thirds year-on-year.

At the other end of the spectrum, American Express reduced its display input by more than 43% measured against 2008, to £1.2m in all.

The media and entertainment industry posted a contraction of 16% in the same period, with retail off by 42.3%, property declining by 45.5% and pharma by 55.2%.

Outside of the top 100, Sainsbury's, the supermarket chain, Fiat, the automaker, and Kraft, the food group, all more than doubled their display adspend.

Despite this, other data suggested that considerable progress still needs to be made in order to cement this channel's position in the media mix.

For example, Procter & Gamble and Unilever, two of the world's biggest advertisers, diverted just 1.4% of the funding allotted to communications to this medium over the whole of 2009.

Similarly, Tesco, the retailer, and Hewlett Packard, the IT giant, cut back on their web communications while boosting their expenditure elsewhere.

Recent figures from the IAB and PwC, the business services group, revealed total online adspend climbed by 4.2% in the UK last year to £3.54 billion, but reported that display actually saw totals slide on an annual basis.

Data sourced from Marketing Magazine; additional content by Warc staff